Upheld: Account administration errors complaint against Klarna Financial Services UK Limited

Decision detail

Summary

Mrs Q complained to Klarna about two additional loan repayments collected without notice in December 2025 and January 2026, which caused her bank account to go overdrawn. Klarna had suspended her repayments during a dispute with the shed supplier and then collected the arrears without adequate notification. The ombudsman upheld the complaint, finding that Klarna breached direct debit notification requirements by failing to provide at least ten working days' advance notice. Although the amounts were legitimately owed and Mrs Q would have entered an overdraft regardless, the inadequate communication caused distress and inconvenience. The ombudsman rejected a full refund but ordered Klarna to pay £100 compensation.

The Ombudsman's reasoning

The ombudsman found that while the amounts collected were reasonably owed by Mrs Q, Klarna failed to provide adequate notice of the additional repayments in breach of direct debit authority requirements, which normally require at least ten working days' advance notification. Although Mrs Q would have entered an overdraft regardless, the lack of communication about the timing and nature of the additional collections caused distress and inconvenience. The ombudsman rejected a full refund as the amounts were legitimately owed and refunding would place the loan back into arrears, but awarded compensation for the inadequate communication and resulting inconvenience.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website